I’m more familiar with their grad programs than undergrad, given that, I do know quite a few kids that went to both places undergrad, here would be the reasons to select UM over UIUC even with UM costing more:
- quality of life seems better at UM than UIUC, Urbana/Champaign is a nice college town but Ann Arbor is great, the kids at UM seem to be enjoying their experience than UIUC, and this from California students!
- reputation - for b-schools, Michigan undergrad is going to be more prestigious than UIUC undergrad, I can attest to this professionally.
- broad strength of programs, if you decide to leave engineering and go to a science, or humanities, Michigan is much better for those programs. UIUC is stem-focused, Michigan has strong programs across the board - Engineering, International Relations, Economics, Business, English, just to name a few.
- alumni networks - Michigan has stronger one, more areas in the country, globally, and more industries